Sticky Fingaz: Debo the Game

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A true masterpiece, especially the end.

It’s far too nice in NYC for me to hang around with a bunch of stiffs, living the “office life.” I’m off to the pool or some other outdoor activity, yet to be decided.

“The Fly” had a masterful trading day, with gains all over the place. Let me remind you, I find great pleasure betting against the world’s premier investment bank: Goldman Sachs Group, Inc. [[GS]] .

For the day, my gains topped 4.5% (as of 3:00 pm), led by shorts in Vulcan Materials Company [[VMC]] ,, Marshall & Ilsley Corporation [[Mi]] , Zions Bancorporation [[ZION]] , Cathay General Bancorp [[CATY]] , East West Bancorp, Inc. [[EWBC]] , Merrill Lynch & Co., Inc. [[MER]] , Lehman Brothers Holdings Inc. [[LEH]] and a variety of inverse etf’, like [[FXP]] .

In addition, I bulked up my selling efforts in LM, as the once brilliant fund manager, Bill Miller, ups his stake in Freddie Mac [[FRE]] . How egregious?

Regarding the markets, I know we will hit new lows. All of this chatter of a ‘global slowdown’ has not been factored into the earnings estimates of our multi-nationals. The loss of revenue, from a global slowdown, far outweighs the gains to be had in a commodity collapse.

Remember, most companies are locked into long term contracts, regarding basic materials and crude. Therefore, copper can drop by 2/3rds right now, and it wouldn’t mean a lick for XYZ’s bottom line.

In short, get drunk and prepare to ride this tidal wave down to 10,850 by mid September.

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I bought 2,000 [[REW]] @ $59.90

I sold short 5,000 Legg Mason, Inc. [[LM]] @ $41.45, 5,000 Marshall & Ilsley Corporation [[Mi]] @ $15.10, 2,000 Cathay General Bancorp [[CATY]] @ $20.05 and 500 Pzena Investment Management, Inc. [[PZN]] @ $9.22.

Disclaimer: Shorting stocks is for river boat gamblers.

I stopped out of both Chipotle Mexican Grill, Inc. [[CMG]] and KB Home [[KBH]] .

Bill Miller from Legg Mason, Inc. [[LM]] is, owing more than 79 million shares of Freddie Mac [[FRE]] .

If the Government cheese makers decide to nationalize Fannie and Freddie, a whole mess of low IQ money managers, who erroneously control billions of dollars worth of investors money, will be annihilated.

Here are some notable holders of Fannie Mae [[FNM]] , in dollars:

Fidelity: 476 million

Citigroup Inc. [[C]] – 376 million

Barclays PLC (ADR) [[BCS]] – 344 million

Merrill Lynch & Co., Inc. [[MER]] – 329 million

State Street Corporation [[STT]] – 274 million

Pzena Investment Management, Inc. [[PZN]] – 170 million

T. Rowe Price Group, Inc. [[TROW]] – 138 million

Janus Capital Group Inc. [[JNS]] – 76 million

Here are some notable holders of Freddie Mac [[FRE]] , in dollars:

Legg Mason, Inc. [[LM]] – 400 million

Pzena Investment Management, Inc. [[PZN]] – 195 million

Citigroup Inc. [[C]] – 169 million

Barclays PLC (ADR) [[BCS]] 155 million

Fidelity- 130 million

Morgan Stanley [[MS]] – 125 million

State Street Corporation [[STT]] – 125 million

Here are some notable holders of SLM Corporation [[SLM]] , in dollars:

Barclays PLC (ADR) [[BCS]] – 317 million

Fidelity- 330 million

T. Rowe Price Group, Inc. [[TROW]] – 290 million

Goldman Sachs Group, Inc. [[GS]] – 246 million

Aside from the above names, Dodge and Cox, Lord Abbett and a variety of mutual fund companies have massive exposure to FNM/FRE/SLM. What stands out, in my opinion, is little ol’ Pzena Asset Management, with their 650 million market cap, coupled with their obscene exposure to the financials. I can’t help but think, they are in serious trouble here.

So, I delved into their holdings and dug up some interesting, yet startling facts.

Those people are out of their minds. Aside from FNM/FRE, they have exposure all over the place. Here is a small list of stocks on their sheets, in dollars:

C– 776 million

Alcatel-Lucent (ADR) [[ALU]] – 688 million

Capital One Financial Corp. [[COF]] – 683 million

The Allstate Corporation [[ALL]] – 555 million

The Home Depot, Inc. [[HD]] – 548 million

Bank of America Corporation [[BAC]] – 503 million

Wachovia Corporation [[WB]] – 392 million

MS– 321 million

J.C. Penney Company, Inc. [[JCP]] – 298 million

Comerica Incorporated [[CMA]] 234 million

Lehman Brothers Holdings Inc. [[LEH]] – 187 million

Level 3 Communications, Inc. [[LVLT]] – 173 million

JPMorgan Chase & Co. [[JPM]] – 152 million

Conclusion: The managers from PZN are wildly insane, holding so many risky investments. I can understand taking down a few banks, in order to bet on a recovery. However, these guys have bet the franchise on it.

Essentially, if you want a super charged gamble on the banks, get long PZN. My guess, investors will continue to pull money out of their funds, effectively wiping them off the map—providing the financials continue to struggle.

A monster pre-announcement by Lehman Brothers Holdings Inc. [[LEH]] is all the rage on Wall Street this morning. Look for the sub-par investment bank to open their big stupid mouths this week, admitting to more write downs.

Very soon, you will begin to see the dastardly bastards from banks raise capital. There will be so many banks going to market with secondaries, it might make your head pop off.

With my money, I am shorting more Morgan Stanley [[MS]] , Merrill Lynch & Co., Inc. [[MER]] , Cathay General Bancorp [[CATY]] and Vulcan Materials Company [[VMC]] —as you read this.

Just know, “The Fly” is poised for greatness, one way or another. Any miscellaneous complaints or bellyaching over the quality of his commentary is always disregarded; because it is a lie.

I can tell you, with a certain amount of certitude, my market gains will be chockfull over the next 2 weeks.

Prepare to witness “The Fly” do it again, while the rest of you just look at your filthy computer screen, in awe, as if you just witnessed Michael Phelps win a 9th gold medal.

Top pick: [[SKF]]

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Think Romanian goat.

For months, the Godly folks at iBC have been developing a service that will auto rank stocks and screen them, using select parameters (things I deem important). Like I said before, this software, whenever we are done tweaking it, will replace my brain, effectively rendering me useless. You can kill me and no one would care, basically.

Anyway, the formula is sort of complex and will get even more complicated, the deeper we get into it. I’ll show you what the system is saying about each Dow component in a second. Before I do, just know, these are NOT recommendations. The purpose of the software will be to identify strong stocks and protect the user from buying retard names. As a point in fact, many of my positions are marked as “Sells” or even “Strong Sells.” Reason being: it rewards strength. Bottom fishing in stocks is always a risky endeavor, but can be quite rewarding if timely. Nonetheless, it is not for everyone and should not be practiced by rookies.

I will get the system to spit out potential bottom fishers too, in special screens. However, overall, it will identify healthy stocks.

We are using Price Performance, Relative Strength, Accumulation/Distribution, Volume and Volatility to rank securities. Eventually, it will include factors such as oil, gold, natty and bond price movements too.

1-2: Strong Sell

2-3: Sell

3-4: Buy

4-5: Strong Buy